G.R. No. 238671 , June 02, 2020
Taisei Shimizu Joint Venture, Petitioner, vs. Commission on Audit and the Department of Transportation (formerly Department of Transportation and Communication), Respondents.

FACTS

Petitioner Taisei Shimizu Joint Venture (TSJV) won the contract for the construction of the New Iloilo Airport with respondent Department of Transportation (DOTr). After project completion, some TSJV billings remained unpaid. TSJV filed a Request for Arbitration with the Construction Industry Arbitration Commission (CIAC). The CIAC rendered a Final Award dated December 11, 2014, granting several claims (Nos. 1, 3, 4, 5, and 8) totaling Php223,401,870.83. Upon the DOTr’s motion for correction, the CIAC, by Order dated February 20, 2015, amended the award, reducing the total to Php216,073,986.89. The award became final and executory. TSJV moved for execution, but the DOTr opposed, stating the funds were public and payment required Commission on Audit (COA) approval. TSJV then filed a petition with the COA for enforcement and payment. The DOTr, through the Office of the Solicitor General, admitted the allegations and stated it had no further objections to the arbitral award. By Decision No. 2016-395, the COA approved payment only for Claim No. 4 (Php104,661,421.35), partially disapproving the rest. The COA disallowed Claim No. 1 for lack of required approvals under procurement laws, Claim Nos. 3 and 5 for lack of legal authority to pay interest and delay costs, and Claim No. 8 (attorney’s fees and costs) as costs are not allowed against the Republic unless provided by law. TSJV’s motion for partial reconsideration was denied by COA Resolution No. 2018-047.

ISSUE

Whether the Commission on Audit acted with grave abuse of discretion in partially disapproving the payment of the final and executory arbitral award rendered by the CIAC.

RULING

Yes. The Supreme Court granted the petition, annulling and setting aside the assailed COA Decision and Resolution. The Court ruled that the COA committed grave abuse of discretion. A final and executory arbitral award, like a final court judgment, is immutable and unalterable. The government, having actively participated in the arbitration and allowed the award to become final, is deemed to have given its consent to be bound by it and waived any immunity from suit. The COA’s disallowance of claims based on a re-evaluation of evidence and legal bases constituted an invalid collateral attack on the final award. The COA’s power to audit does not extend to reviewing, revising, or reversing the merits of a final arbitral award. Its role is limited to ensuring the legal availability of funds for payment. The award must be enforced as rendered. The case was remanded to the COA to approve the payment of the full amended arbitral award of Php216,073,986.89, plus the stipulated 6% per annum interest from December 11, 2014, until full payment.